Month-on-month CPI headline (core) at (0.1 ppt above) Bloomberg consensus. Month-on-month PPI 0.3 ppts above consensus of 0.4 ppts. Y/Y core CPI continues to decline, while instantaneous core inflation is flat.
Category Archives: inflation
Close to/at Target Inflation
Instantaneous (Eeckhout, 2023) PCE and CPI inflation.
Quantity Theory/Divisia – PaleoKeynesian Phillips Curve Horse Race
Does an error correction model of the Divisia M4 quantity theory or a old style expectations and supply shock augmented Phillips curve fit the post 2019 period better (using 1998-2019 data)? Answer: The Phillips curve works better.
The Ecological Monetarism QED
Reader Econned asks me for a critique of ecological monetarism. I don’t have one overall assessment, but I will say that I do not understand (1) how Cameron Harwick came up with the conclusion that the case for ecological monetarism was proven by inflation outcomes, and relatedly (2) how the below graph was constructed, which I believe is the basis for that conclusion.
Divisia M4 and the Price Level
Posit money includes everything in M1-M3 and Treasurys per John Hall (says use broad divisia aggregate). Estimate a regression of log GDP deflator divided by Divisia M4 and real GDP over the 1967-2019 period (Engle-Granger).
Divisia Money Measures: Resurrecting the Quantity Theory?
Reader Econned, in response to my posting of pictures of M2 divided by real GDP, and the GDP deflator, castigates me for the use of conventional monetary aggregates:
M2? This is a pitifully disingenuous post – those who see value in QTM use a divisia index as the monetary aggregate. And you know this.
US GDP Deflator, Broad Money, and Velocity
Some pictures, for those who believe in the constant or trend velocity Quantity Theory for the US.
Guest Contribution: “The drivers of market-based inflation expectations in the euro area and in the US”
Today, we are pleased to present a guest contribution written by Christian Hoynck [1] and Luca Rossi of the Bank of Italy. The views presented in this note represent those of the authors and do not necessarily reflect those of the Bank of Italy.
Guest Contributions: “Energy shocks and core inflation in the US and in the Euro Area: this time is different”
Today, we are pleased to present a guest contribution written by Kevin Pallara, Luca Rossi, Massimiliano Sfregola and Fabrizio Venditti of the Bank of Italy. The views presented in this note represent those of the authors and do not necessarily reflect those of the Bank of Italy.
Inflation in July: Central Tendency Down
Headline and core y/y CPI inflation undershoots slightly Bloomberg consensus (by 0.1%) (and below Cleveland Fed nowcast for headline of 0.4% m/m, see yesterday’s post). Overall, trend is down even if headline y/y is ticks up slightly.